Vietnam’s public debt growth has slowed and will only rise by an estimated 9 per cent this year compared to 15 per cent last year, Minister of Finance Dinh Tien Dung has said.

“Public debt has been closely controlled and this is demonstrated by lower year-on-year growth,” Minister Dung told a Q&A session at the National Assembly on November 15, though he also acknowledged that the country’s public debt remains high, creating significant repayment pressure.

National debt had reached more than VND2,600 trillion ($116 billion) as at the end of 2015, equal to 62.2 per cent of GDP, the country’s Finance and Budget Commission wrote in a report on the country’s debts and obligations for 2016-2020.

The government has gradually cut State budget overspending, aiming to ensure public debt safety, he said.

The government has set a target of keeping State budget overspending at 3.5 per cent in 2017, 3.7 per cent in 2018, 3.6 per cent in 2019, and 3 per cent in 2020.

Last year, the government did not offer loan guarantees to any State-owned enterprises (SOEs), the finance minister said, adding that it will continue to tighten such loans.

There are concerns that when an SOE can’t repay its own debts, the government steps in and assumes responsibility. More than 100 major SOEs had borrowed a combined VND1,500 trillion ($67 billion) by the end of last year, with a large part owed to foreign creditors. These SOEs have borrowed $15.6 billion from overseas, of which more than 60 per cent was either official development assistance loans at low interest rates or loans guaranteed by the government.

Speaking at the session, Deputy Prime Minister Vuong Dinh Hue said the government has taken control of guaranteed loans and will not raise the public debt ceiling.

Some lawmakers and experts have suggested raising the government’s debt ceiling to fund its budget obligations from the current 50 per cent of GDP to 55 per cent.

Vietnam’s government debt in 2015 rose above the maximum, totaling VND2,133 trillion ($95.6 billion), or 50.9 per cent of GDP, according to the General Statistics Office.

The National Assembly has also set a ceiling on public debt of 65 per cent of GDP and a limit on foreign debt of 50 per cent.

The World Bank forecasts that Vietnam’s public debt will climb to 63.8 per cent of GDP this year and 64.4 per cent next year. The growing debt will impose a steadily increasing burden on the economy and make it harder to cut the budget deficit, which hit 6.1 per cent of GDP last year.